TheStreet.com Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking outperformance on a total return basis.TheStreet.com's stock-rating model upgraded Ameristar Casinos ( ASCA) to "hold." The company owns and operates casinos and hotels in the U.S. The numbers: First-quarter revenue decreased 3% to $316 million as the company swung to a net profit of $30 million, or 52 cents per share, from a net loss of $60 million, or $1.07 per share, in the year-earlier quarter. The operating margin improved from 16% to 22% and the net margin climbed out of negative territory to 9%. Ameristar's financial position is weak. The company holds just $92 million of cash reserves, amounting to a low quick ratio of 0.6, and has $1.6 billion of debt. A debt-to-equity ratio of 4.5 indicates excessive leverage. The stock: Ameristar Casinos has surged 127% in 2009, outperforming all major U.S. indexes. The stock offers a 2.2% dividend yield. The model upgraded Cognizant Tech Solutions ( CTSH) to "buy." The company provides information-technology consulting and services and outsourcing services in North America, Europe and Asia. The numbers: First-quarter revenue ascended 16% to $746 million as net income improved 11% to $113 million and earnings per share climbed 12% to 38 cents. The operating margin increased from 17% to 19%, but the net margin dropped from 16% to 15%. Cognizant has an ideal financial position. Its balance sheet holds $808 million of cash reserves, which translates to a high quick ratio of 4.1. And the company has financed itself entirely with equity, so it has no debt obligations or interest expenses. The stock: Cognizant has surged 63% in 2009, outperforming all major U.S. indexes. The stock trades at an expensive price-to-earnings ratio of 20 and doesn't pay dividends.
The model upgraded Greif ( GEF.B) to "buy." The company makes and sells industrial packaging products, container board and corrugated products. The numbers: Fiscal second-quarter revenue declined 29% to $647 million as net income and earnings per share fell 75% to $12 million and 26 cents, respectively. The operating margin improved from 8% to 9%, but the net margin dropped from 5% to 2%. The balance sheet holds $66 million of cash, amounting to a less-than-ideal quick ratio of 0.9. A debt-to-equity ratio of 0.9 demonstrates moderate leverage. The stock: Greif has increased 37% in 2009, outperforming all major U.S. indexes. The stock trades at a price-to-earnings ratio of 16 and offers an attractive dividend yield of 3.3%. The model upgraded Mattel ( MAT) to "buy." The company designs and manufactures toys, dolls and games worldwide. The numbers: Second-quarter revenue fell 19% to $898 million as net income and earnings per share doubled to $22 million and 6 cents, respectively. The operating margin improved from 3% to 4% and the net margin inched from 1% to 2%. A quick ratio of 1.1 reflects Mattel's ample liquidity. And a debt-to-equity ratio of 0.5 indicates conservative leverage. The stock: Mattel has risen 18% in 2009, outperforming the Dow Jones Industrial Average and S&P 500. The stock trades at a price-to-earnings ratio of 17 and doesn't pay dividends. The model upgraded Southern Union ( SUG) to "buy." The company gathers, transports and distributes natural gas in the U.S. The numbers: First-quarter revenue fell 28% to $684 million as net income and earnings per share dropped 44% to $46 million and 36 cents, respectively. The operating margin fell from 16% to 13% and the net margin dropped from 9% to 7%. The cash balance has deteriorated 83% to $5.5 million since the year-earlier quarter. A quick ratio of 0.2 demonstrates weak liquidity and a debt-to-equity ratio of 1.5 reflects a hefty debt burden. The stock: Southern Union has surged 45% in 2009, outperforming all major U.S. indexes. Yet the stock still trades at a price-to-earnings ratio under 10 and offers a dividend yield of 3.2%.